An Extraordinarily Bad Idea

So, anyway, I've been out of touch for the past two weeks. Not surprisingly, I missed this one. I had no idea that this was even being debated by those folks you might otherwise assume had some semblance of intelligence. What am I talking about? The Trillion Dollar Coin.

If, like me, you've been under a rock for the past few days and you have no idea what I'm talking about, here's a list of links for you to peruse:

Let me make this perfectly clear: THIS IS AN EXTRAORDINARILY BAD IDEA. It's one thing for The Fed to monetize the debt by printing money and buying treasuries. At least this method of funding the U.S. government has a tiny modicum of reality in that bonds are purchased which come with the future promise of repayment. The platinum coin idea is the outright creation of money from thin air. It is a true, immediate and real devaluation of the currency. Of course, some would say that devaluation and debt remediation are the only options for dealing with the current situation and, frankly, they're right. It's really the only way. The Fed must inflate in order to pay off yesterday's debts with the less valuable currency of tomorrow. However, to do it all in one swoop...to simply create $2T out of thin air...would be catastrophically inflationary. It would set off a full-blown flight from the dollar and from treasuries. The much-discussed hyperinflation and financial collapse would finally be upon us.

So, anyway, what's the point of this post? I don't know. Maybe it's just simply to let you know how desperate the situation has become. Maybe it's to point out to you, for future reference, just how completely clueless some in the financial media and politics truly are. Maybe it's just a reminder that you must continue to stack physical gold and silver, the only true and sound money, and the only financial protection you have against the madness.

348 Comments

For the reporting week, gold rose by $23 and the OI rose by 1700 contracts. Silver rose by 33¢ and its OI rose by 738.

The gold CoT was kind of a non-event. The Gold Cartel bought 3700 longs but also added 4700 shorts. The only other item of interest was the Small Specs who added 2200 new longs, just in time for the Thursday beatdown.

The silver CoT continues to fascinate. The Small Specs did nothing but the Large Specs dumped 1300 longs. Normally, this would lead to JPM covering 1300 shorts. Unfortunately, for them, the rest of The Bad Guys were on the buy-side of 1100 of the Large Specs selling. This left only 259 contracts for JPM to cover into. As a result, The Silver Cartel is now long 45,415 contracts and short 90,751.

At 45,415 the Silver Cartel gross long position is the highest it has been since 8/14/12 when it was 47,797. So, everyone but JPM is the most long and most bullish they have been since last summer when the price was $27.92.

And let me remind you, price then exploded on 8/20 and silver rallied over the next 18 trading days from $28 to $35. Am I stating with 100% confidence that that is about to happen again? No. But you must be aware of similarities in the Cartel long position and speculator sentiment. If anything, those calling for $26 and lower silver are completely wrong and ignorant of how the internal dynamics of the silver market effect price.

Yea I read that coin story, I mean really wtf has this world come too?

As you say TF, insta-devaluation. I suppose it's a possible "Oh we didn't know that would happen" type thing, so as to fool the public that the politicians/bankers had no idea what they were doing and were just trying something "new".

Maybe it's a way of legitimizing a return of the "coin" standard and to "end" the fed? Maybe it's a way of the masses saying "well if you can do this to fix the debt why not issue coins and just end the fed?"

does it really matter what 'they' do to fund the spending? We have more government than the economy can afford. Monetizing with bond purchases, or making a big fake trillion dollar coin are the same solution to an unsolvable problem. Perhaps the coin will nudge a few more people to realize how ridiculous the situation truly is.

Turd Ferguson: The Inexorable March Higher For Precious Metals

But there's one thing this irreverent, acerbically goofball forecaster is stone-cold serious about: the need to build personal exposure to the precious metals.

For him, it's a straightforward mathematical certainty that the global economy must collapse under the weight of the excessive (and exponentially compounding) credit amassed over the past several decades. The debt is simply too large to be serviced.

As a growing number of analysts (including Chris) are predicting, Turd sees the replacement of the world's current monetary regimes as the endgame to this story. And he believes we are watching that endgame unfold in real-time now.

In this interview with Chris, Turd discusses his reasons why gold and silver offer the best prospect for preserving wealth through the coming devaluation of world currencies, despite his strong conviction that the markets for these metals are heavily price-manipulated.

In fact, it's precisely due to this manipulation that Turd is able to predict short-term price movements in gold and silver as confidently as he does:

Believe me, if you looked at my trading account and looked at my success in trading corn, or soybeans, or crude, or something like that: I make choices just as badly as the average guy. The reason why I am successful in forecasting gold and silver is because they are manipulated.

Because once you understand that the bullion banks, particularly JPMorgan in silver, are in there trying to stack the deck in their favor, then you use some simple technical analysis. And you begin to see where they're going to act, where they're going to place some sell orders to try to start cascading waterfall selling by tripping stocks. It's not real hard. I mean, its pretty basic stuff. But once you admit to yourself that if this does take place, it makes forecasting where price is going pretty easy...

We see this quite often where the prices of gold and silver – they decline rather sharply after hours, after COMEX trading hours, on the Globex because volume is so thin there. A little bit of money thrown at the market – any new paper shorts can have a rather dramatic impact...

And that is where the manipulation has a lasting impact. And you can't get that money back... And it takes a whole bunch of new buy orders, a whole bunch of new speculative longs and commercial longs to come in and bid it back up to where it was before that raid. And so, they're always going to be in there. Again, I guess the ultimate question is at who's behest are they doing this? But, nonetheless, they're in there controlling price, managing the assent, if you will, to create this illusion that there's still confidence in the dollar, that all is well. And that it's okay to go buy a new car.

Turd sees the precious metals as a true barometer of the dollar's devaluation as the Fed pursues its policy of negative real interest rates -- which is challenging for the average consumer to see, when the dollar may strengthen on a relative basis versus other fiat currencies and the government-published CPI is artificially low. In his opinion, the government is well aware of the signaling function of the PMs, and therefore feels it needs to manage their ascent in as drawn-out and orderly a process possible in order to prevent the frogs in the pot (i.e., the citizenry) from noticing that the water is getting a lot hotter.

The important mission here, in Turd's mind, is to realize that the economic reality we have come to accept as "normal" is over, and to take protective action. And once you have done so, to try to help those around you wake up to that fact -- a major challenge, as most people don't want to think about it, and the entrenched status quo powers are aggressively marketing that 'return to normalcy' is just around the corner:

The last thing I would add to that, Chris, and one that's challenging, and I'm sure you've seen this too in working with your subscribers is where we are headed is unlike anywhere where we've been, at least in recent memory. I mean, there may be some octogenarians out there that remember what it was like before the Great Depression and during the Great Depression and before World War II. But it's a world like that where we're headed to.

All I've ever known, all my friends and family, even my parents really have ever known is this hegemonic United States that was the world power, and provided the world's reserve currency. And we could print as much as we wanted to, and then export the inflation to all the other poor staff that had to – took our dollar. And so we bought their cheap stuff. And those days are over, and it's a really hard concept.

If you haven't had personal experience with something else, it's a really hard concept to get your arms around. That the United States isn't going to be this huge economic and military superpower. Just because it always has been doesn't mean that it always will be. And as we talked about, the numbers and the fundamentals suggest that it's not always going to be.

And so you got to kind of prepare yourself that tomorrow's not going to be like today, that we're in a new paradigm. And try to intellectually figure out, okay, how do I survive and prosper in this new world knowing that it's coming? And that's what we try to do. I know that's what you try to do. And it's our job, Chris, to try and help as many as we can.

Click the play button below to listen to Chris' interview with Turd Ferguson (runtime 47m:19s):

The platinum coin discussion has gone from parody to public policy discussed by "serious" economists!! If our politicians ctually resort to such an obvious gimmick then perhaps folks will wake up. I can't imagine such an act not triggering a bond collapse.

(Of course, this is the country that just reelected BHO and some wag once observed "no one ever went broke underestimating the stupidity of the American people".)

If Congress pulls this then we all ought to investigate second citizenship because this ship will sink in our lifetimes.

On page 11 of the last thread I brought up this very topic, and the whacked out theory of a 1100X devaluation of the currency/revaluation of all the metals and the flash $33000 silver spot price glitch a few months ago.

Also to add, Bernanke gave a speech a few years ago where he talked about devaluation of the currency as a possibility.

FDR did it with gold in '33. Obama can do it with platinum in '13. What a better way to celebrate the 100 year anniversary of the Federal Reserve and Timmy's retirement at the same time?

I am not saying it is going to happen, but too many coincidences are lining up.

Platinum or palladium? They're both of less value than gold. Hmmm, seems just another ploy to deny the true value of gold (and silver). In the stories I haven't seen mention of this supposed coins weight or at what value the weight would be determined. Seems nothing more than yet another deception by the masters of illusion and their lackys. We (meaning "they") will base our new system on platinum and palladium because they are cheaper than the gold we don't have anymore and because you will believe any shiny thing we say.

To which I say to every USG rep and agent, go pound sand you lieing idiots.

Correct me if I'm wrong, but if the Federal Reserve is a private bank, and the US Mint were to make this $1t Platinum coin and then hand it over to the fed, wouldn't this be grand theft or something???

"I'll see your $2 trillion and raise you $5 trillion". Then Europe says, "It's our turn and we'll raise you too!" When will these knuckleheads see that the race to devalue involves more players than just the US?!

"so everyone but JPM is the most long & most bullish since last summer"

This news has to be disconcerting for Bulls. Bull markets travel light - with everybody on the long side, from whom will the longs make their money?

From a long term technical perspective, there is no reason Silver can't trade back between $18-$20 where it spent almost two years. You think morale is bad now for the bulls, imagine what a sojourn down to $20 would do. At that point, Everyone but JPM would be the LEAST long & LEAST Bullish in years. Those are necessary ingredients for extended rallies in the Silver Market. In reality, $20 silver is only a 33% drop from here. Silver can do that in no time, as any silver vet can tell you.

As a long term bull myself, I am not looking forward to the flushing out of all the recently added longs - as it will require a steep drop in price. But for the long term health of this bull, its necessary.

You know what this reminds me of? Think back to when you were a kid, going to grade school. One day, a new kid from a new town far far away showed up. At recess, some adventurous kids approached the new kid, and struck up a new conversation. They asked the new kid if he wanted to play a game with a ball. He said yes. So they all went to the blacktop and started to play. The ball went over into the grass.

Everyone got all silent, scared. The new kid walked over, onto the grass, picked it up, and came back to the blacktop. The kids all looked at him, stunned.

You see, those kids had all been told NEVER to go on the grass, for it was dangerous. All the authority figures, teachers, principal, parents, had always told them that grass was bad and to NEVER go near it because bad things would happen. All the kids were afraid of the grass, and did as they were told, never ever going onto the grass. They had never been on the grass, had no grass anywhere else, ever, not even at their own homes or in the parks. All they knew was that grass was bad and to never go near it.

When then new kid walked back with the ball, he told everyone else how grass is not dangerous, that it is natural, it feels good to walk on, is cool to the feet, and is perfectly normal and will not hurt anyone. When the new kid offered to demonstrate, and show everyone else that it was safe, all the kids ran in fear.

One kid stood there and told the story how one day, he had gone onto the grass, and a nasty rash broke out, with constant itching. It was terrible, and he for one, would never ever go onto the grass.

When the new kid told the others of the fantastic fun he had had on grass where he came from, like playing soccer, baseball, running barefoot, the other kids all just laughed and made fun of him.

Eventually, some of the kids went with the new kid onto the grass and had fun. Nothing bad ever happened to them, but the blacktop kids always made fun of the grass kids, and they never ever did see the truth.

That is EXACTLY like us enlightened ones on this blog, who view physical gold and silver as real money, in this day and age of fiat. We all see the truth. We all believe the truth. But, try as we may, those mired in the fiat scheme either have not the capacity to learn or understand the truth that is the fraud of fiat fractional reserve scheming, or have not the desire to understand the truth. For those folks, there is NO hope of trying to get them to change their outlook. None. I do not have the time or will to attempt it anymore, and I won't

Those who are interested in the truth, can come here, and hear our stories, learn our widsom, apply it, and be prepared. Others, stuck in the system, watching tv, following whether a Kardashian is banging another rapper, can go about their lives the way they want.

Some of us will just quietly prepare and try to help others despite their shortcomings. Soon enough, the time will come, and we will all feel at once justified for our preps, and horrified and the suffering of those who did not. We must be strong.

This latest idiocy of the Trillion dollar coin being floated is proof beyond reasonable doubt of the impending currency collapse. There are no leaders that exist to counter the MOPE. None.

What will happen will happen, certainty, no doubt, including dollar collapse and other forms of misery.

Turd, I beg you to please keep this site going. Find the energy, do what you need to do.

I currently have a sizeable percentage of my wealth in physical silver and some gold. I have inherited some fiat recently. I've been looking at Provident Metal's 2013 pre order of Silver American Eagles monster boxes @ 2.49 over spot, it appears to me to be the best price out there. Am I missing something? Next I was tempted to buy yesterday @ spot 29.30 area right before BLS date release. The technical picture appears that silver is headed lower. What's your opinion. I will cost average down as I can afford to buy up to 5 monster boxes.

Too many of "right sort"will get fried by the destruction of bloated .mil budgets,by a stock meltdown of the big defense guys.
They will come up w/a fix,or the powers that are will put in a new set of clowns.

It was interesting to see top generals use the tea party as a example of a home-grown terrorist type organization that would be targeted should they start making noises about the Constitution,and the necessity of a revolution every twenty years or so....
When I saw that I just went wow....

We really are on the edge now kiddies.I haven't a clue what will start the ball rolling,but it will go bat-shit crazy fast when it does. Where we go from here is anyone's guess. Best put in goodly amount of popcorn and your fav. beverage

Bee good or,
Bee careful

snuffy

Bottom line is that about the time the dollar collapses a lot of other S is going to HTF as well. I don't have answers, or predictions. But the Club of Rome wasn't far off, and I'm pretty sure a lot of the PTB types have read it as well.

SPIEGEL ONLINE: Professor Meadows, 40 years ago you published "The Limits to Growth" together with your wife and colleagues, a book that made you the intellectual father of the environmental movement. The core message of the book remains valid today: Humanity is ruthlessly exploiting global resources and is on the way to destroying itself. Do you believe that the ultimate collapse of our economic system can still be avoided?

Meadows: The problem that faces our societies is that we have developed industries and policies that were appropriate at a certain moment, but now start to reduce human welfare, like for example the oil and car industry. Their political and financial power is so great and they can prevent change. It is my expectation that they will succeed. This means that we are going to evolve through crisis, not through proactive change.

The market watch "glitch" for the price of silver was $3,400 not $34,000. Other than that I agree fully with your analysis.

Z

PS Hope your finances work out so you don't have to sell all of your stack. If you must sell some try to find a fellow stacker and explain your situation. Hopefully they will pay you a fair market price.

We do not know the direction of silver, we know that it is massively undervalued, however with the Evil Empire so firmly in control at the present time, the price of silver will go exactly where it is they want it to.

The dollar on the other hand has only one possible direction, down, down, down, (no need to go on).

The timetable is also unknown, a collapse is inevitable, but it could be anywhere from hours away to years from now.

I personally do not think we have very long, the system is coming unglued at an exponentially increasing rate.

If I was in a position to decide when to buy five monster boxes, my own thinking would be as soon as possible.

Trying to time this market is gambling, when the house holds all the cards, and knows exactly what is in your hand.

Besides that, taking five monster boxes off the market does more to damage the Evil Empire than just about anything else we can come up with at this point in time.

Thanks for the correction. I cannot seem to find the chart in the blog search or a google search. Might have been imagining it. Thanks for the well wishes, my LCS owner is giving me a great deal since I am in there all the time. He is fair and honest, and has always taken care of me.

Another thing on this T$C...

Section (k) of 31 USC § 5112, "Denominations, specifications, and design of coins" plainly states that the Treasury Secretary can create arbitrary quantities of new legal tender as long as it's made out of platinum:

(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

For those of you interested in finding some sort of measuring stick for your stack that is not some BS broken, manipulated, fiat shitnote, here is something interesting for you. I am reading my local paper and it has a section titled "From The Archives" and in it are some excerpts from the "Little" Family Journals.

Why not mint a platinum coin and assign it a value of one trillion dollars? Such a coin need not weigh thousands of tons at the current spot price of platinum in order to be valued at one trillion dollars, as some critics contend. After all, why is a one hundred dollar note valued one hundred times greater than a one dollar note, even though they're both printed on the same piece of paper? Its value is one hundred times greater because the government says it is. Similarly, a one trillion dollar platinum coin can be of any size, shape or dimension and be valued at one trillion dollars because, again, the government says it is. The creation of such a coin would put an end to the antagonizing and polarizing theatrical debates currently roiling Congress and would avoid the possibility of the country defaulting on its debt obligations, which would be far worse (think Greece x 100).

DISCLAIMER: The charts and analysis provided here are not recommended for trading purposes. Trade at your own risk. The Turd provides knowledge not direction. Turd holds no liability for your trades and decisions but he's happy to take credit when credit is due, particularly through the "donate" button. Read more...